Saturday, March 10, 2018

Saturday, March 10, 2018

by Akos Rona-Tas, Professor of Sociology, UC San Diego

Between 2013 and 2015, the University of California, has
signed a series of contracts with the consumer credit agency Equifax. It has outsourced our employment verification to Equifax
Workforce Solutions (TALX
until 2012), a subsidiary of Equifax. UC employees in the past could receive an
employment verification letter from their campus, most recently through their At-Your-Service
Online (AYSO) site. Though this option is still available, employment verification (often requested for bank loans or by prospective
employers) will soon be handled at all campuses through Equifax’s web site: The Work Number (TWN).

Currently, all but two University of California campuses
participate in the outsourcing. UC Santa Cruz and UC Berkeley are supposed to
join the other campuses in the near future.

There are at least three reasons that this is cause for
serious concern. The first has to do simply with data security. Recent security breaches at Equifax compromised 147
million records. Earlier, smaller breaches resulted in the theft of tens of
thousands of employment files.

And the third, data aggregation, is probably the most
worrisome. Equifax purchased TALX in order to aggregate employment data with
data from other of its subsidiaries, including its credit registry. Weak
security, poor service and big data aggregation are the three chief concerns that
I will address below.

All three are rooted in one simple cause: people like you and me (the faculty and staff
of the university) are not the customers of Equifax. We are just its data, its
product. Equifax’s business depends not on the people whose data it sells but
on employers and lenders who provide and use their data.[1] The UC-Equifax contract
takes away most of our control over our own data.

While those three problems burden faculty and staff
individually, there is also the question of whether this contract makes any sense
as an economic proposition for the university as a whole. UC pays Equifax for
accepting our data and TWN site then charges for each inquiry (except when one
looks at one’s own record). I will not be able to address this question, and
this is a secondary issue, in any case. But UC is about to complete the UCPath Project,[2]that will centralize all HR functions at UC. It is unclear why Equifax needs to be inserted as the middleman between
verifiers and UCPath.[3]

Background

More than eleven years ago, on December 18, 2006, UC
employees of all campuses except Berkeley, UCSC and UC Irvine, received an
email message about new tax services offered through TALX, a private payroll
service company that at that time was independent. We were told that our
payroll data will be sent to TALX and we can download our W-2 form from TALX.
If we wanted to opt out of this service individually, we were given until
January 1, 2007 to do so.

The faculty at several UC campuses revolted not just against
the idea of handing our data to a private company but also against the process
that not just failed to consult faculty (or other employees) but was clearly
designed to minimize our ability to opt out. Our fears deepened when, on February 14, 2007, TALX announced it was going to be bought by Equifax, one
of the three giant credit bureaus, for $1.4 billion. The next day, in an earnings
call, Richard Smith, CEO of Equifax, explained
to investors that TALX data will be used to improve Equifax
credit files.

1.
The University shall take appropriate action to terminate the TALX contract;

2.
The University shall take responsibility for purging all employee information
from the TALX databases; and

3.
The Office of General Counsel shall review its opinion that the University has
the authority to disclose employee information without the consent of its
employees.

As a result, the TALX contract was terminated. We were also made the following promises: in similar cases in the future, faculty will be
consulted and any similar program will be on a strictly opt-in basis.

In October 2016, I was surprised to find out that UC had subsequently
outsourced our data to TALX’s successor, Equifax Workforce Solutions. To the
best of my knowledge, there wasn’t even a public announcement that this would
happen.

When I inquired about the promised consultation I was informed that

The UCPath Center Leadership met with several groups at UC
Office of the President to explain The Work Number process and gain approval.
On October 28, 2014 UCPath Center Leaders met with Vice Provosts of Academic
Personnel including Vice Provost Carlson and on November 14, 2014 they met with
Academic Senate Faculty Welfare Committee meeting chaired by [XXX] from UC San
Diego. Both of these groups reviewed and approved the program for the
University of California.

The “consultation” described above took place in 2014, while
the first contract was signed in 2013. As I found out, at least two campuses,
UC Riverside and UC San Diego, already had their own agreements with Equifax
and had been already delivering data as
early June 1, 2012.

As for the “strictly opt-in” promise, that one was not kept
either. Currently, even opting out is a major challenge. Last year, I was
promised that an easy way of opting out would be implemented soon. This has yet
to happen.

Below I will expand on the three main concerns about
outsourcing our payroll data to Equifax, and why we need to worry about our
ability to control our data and our data privacy.

Weak Data
Security

The first reason why payroll outsourcing is harmful is that Equifax
has a terrible history of data breaches. A few examples:

--In 2016, tax information of
431,000 employees of the grocery chain Kroger
was stolen from Equifax.

--In March, 2017, Equifax
was notified by Apache, a software developer, that its Apache Struts web
application, used by Equifax, had a security bug and was offered a patch. Equifax
failed to install it. In mid-May, hackers broke into Equifax and had access to
client data until July 29, 2017.[4] The breach was reported
only on September 7, 2017.[5] The count of compromised
records as of March 3, 2018, stands at 147.9 million in the US alone. The last
2.4 million records, that include among other things driver’s license numbers,
were just reported officially on March 1, 2018.[6]

We still do not know the
true extent of the damage. What we have found out so far was the
product of intense Senate investigations. Senator
Elizabeth Warren wrote: "I spent 5 months investigating the
Equifax breach and found the company failed to disclose the full extent of the
hack. Today, Equifax acknowledged that 2.4 million more people were affected
than initially reported and that driver's license information was also stolen.
Equifax can't be trusted. Their mistakes allowed the breach to happen, their
response has been a failure, and they still can't level with the public.”[7]

Despite these breaches, in the 2017 proxy
statement attached to its 2016 Annual Report, Equifax justifies
bonuses to its CEO, Richard Smith and CFO John Gamble, among other things, by
citing their outstanding records in data security. This is after a year of
serious breaches, written just a few days after the Apache notification.

How much confidence can we have in what Equifax tells us
about its data security? Not much.

Poor
Service

Credit registries like Equifax have had a long history of
data problems. External research on bad data in credit bureaus focused on
credit records, as data aggregation from other sources is a relatively new
phenomenon. The Federal Trade Commission (FTC) has conducted five reports between
2004 and 2012 on the accuracy of credit histories and found various
discrepancies. In its latest, 2012
study, the FTC found that 21 percent of
consumers had identified errors that have subsequently resulted in a change in
their record.[8]

The three credit bureaus are notoriously
recalcitrant when it comes to consumer complaints. Most of their customer
service is outsourced to India, Chile and the Philippines, and requests for
corrections may take years. The bureaus prefer settling court cases
with the most persistent complainers to committing to investigating
thoroughly every complaint brought to them.

There are many
journalistic treatments of the horrific customer service Equifax (and the other
two registries) provide.One excellent
piece is by John Oliver. In brief, if you find an
error in your Equifax file, your ability to correct it is very limited.

Data Aggregation

Since the late
2000s, Equifax has embarked on a project of data aggregation. The Gramm-Leach-Bliley
Act, also known as the Financial Services Modernization Act of 1999 (the one
that replaced Glass-Steagall) removed the obstacles that prevented companies from sharing data among subsidiaries they own. As long as two companies belong to the
same holding, they can legally exchange information.

As a result,
companies began to aggregate data by acquiring other, data rich companies. Initially,
Equifax planned to use payroll data only to “beef up” so called “thin files.”
Thin files are credit records with little or no data for an individual. Yet,
there is no reason for Equifax to stop at thin files and not use payroll data where
it is available for all files in calculating the single number that summarizes one’s
credit record, called the credit (or FICO) score. And Equifax, indeed, did not
stop there. It also purchased Discovery
Solutions, a tax data specialist company and IXI Corp, collecting wealth
related information. In two company videos, Equifax explains how they use
payroll, tax and wealth data to create their new product
Decision 360TM.

Decision 360 TM, The True 360° Consumer View™, “draws from a wealth
of unique data sources and insights that include:

•
Exclusive access to more than $10 trillion in investable asset data [IXI].

• 195+
million active employment records from more than 2,000 U.S. employers [TALX].

• SSN
verification based on searches of more than 15 billion public/private
databases, and authenticated by the Social Security Administration.

• An extensive credit reporting database of more
than 250 million consumer records [Equifax’s original credit registry].”

There is a lot more to come. In
2016, at a financial conference, Rick Smith, then CEO of Equifax, according to the New York Times, “described a new system that searched four billion public
tweets for keywords like “car” and “automotive lease.” It paired the tweets
with a person’s Equifax credit file. In real time, the credit bureau could
identify potential buyers and provide its customer, a company selling car
leases, with everything it wanted to know about those people.”

Why
you should worry

It's easy to explain why one should worry about weak data security that may lead to identity theft. You may wonder, though, why it is the individuals who must pay
the entire price? If your data is stolen and used to open a new loan account or
to file for false tax returns, why is it not the lender or the IRS who should
be responsible for not properly checking the identity? Why is the burden of
proof on the victim?

UC administration argues, as does Equifax, that our data
is more secure with a company specializing in data management and protection
than with UC. This is a strange argument that assumes that data is like gold: once you move it from your cupboard to a bank vault, you are more secure. The
fact is that our data remains with UC, even if it is handed over to Equifax.
Giving it to Equifax only provides another opportunity for hacking. Hacking
Equifax may be harder than hacking UC, but it is much more lucrative. Outsourcing further reduces safety.

Why one should care about
poor customer service is also not hard to see. Correcting errors and settling
disputes are daunting tasks with a company that is unaccountable to the people whose data it
processes.

Why one should be concerned about data aggregation is perhaps less obvious. UC’s contract with Equifax
does not permit the sale of our payroll data to third parties[9], but it doesn’t prohibit
the transfer of data within Equifax, which is why Equifax can merge payroll
with credit records.

Data aggregation tightly couples various forms of social
disadvantage. Suppose you lose your job. Merging payroll data with your credit
history results in an immediate downgrading of your credit profile and your
credit score will drop. As a result, just when you are most vulnerable, your
access to credit becomes more difficult and expensive, making default more
likely. Worse yet, credit scores are also used by insurance companies setting
car insurance premiums, by landlords in negotiating and granting rental
applications, and by the majority of private companies in hiring as part of
their background checks. Higher car premiums, worse rental conditions and and inability to find your next job immediately will all affect your score adversely. Individuals can be thrust into a downward spiral. At a societal level, data aggregation amplifies inequalities. (I explain this in more detail in this publication.)

Finally, Equifax may expand its business into new realms. In
the past, Equifax was caught selling TWN
data to debt collection agencies, but that is not illegal. Were Equifax to launch its own debt collection business, it
could move payroll data not just legally but also invisibly to exploit “data
synergies.”

As big data inevitably proliferates in the world, the rules
of the game are still evolving. Our actions now will decide how much control we
keep over our information. UC walked into a contract, probably to save a few
dollars, squandering our control over our own data. UC is the largest employer
in the largest state. It should respect our data privacy and should set a
national example.

Additional
links:

Watch Dann Adams, President of TALX explains data
aggregation and the role of TALX in Equifax’s effort. (Needs Adobe Flash Player)

[3]You
may ask, can’t anyone get access to our salary information, anyway, through public sites like the Sacramento Bee? Can’t anyone just harvest that data?
Public sites give only our annual salary, and only with more than a year delay.
Our payroll data is delivered monthly or bi-weekly to Workforce Solutions and
includes length of employment, and most importantly, unique IDs, like the SSN,
that allow Equifax to merge our data with other records.

[4]We know that Equifax Chief Financial Officer John
Gamble sold shares worth nearly $950,000 on August 1. Joseph Loughran,
Equifax's president for U.S. information solutions, sold shares on the open
market worth about $584,000 on August 1 as well. And Rodolfo Ploder, president
of Workforce Solutions, sold stock for more than $250,000 on August 2. At that
time, the share price was $145. After the data breach announcement, the share
price plummeted to $92. Currently, it is under $120. In November, Equifax’s board clear the executives of
all charges of insider trading.

[5]The
delay gave hackers plenty of time to take advantage of their data.

The hypocrisy of Columbia is overwhelming. Columbia's President Lee Bollinger is a renowned scholar of the First Amendment and Columbia trumpets its commitments to the notions of free debate and the force of reasoned argument. But apparently they are only committed to these principles when it will not cost them control over their graduate student laborers. Both the University and the Union have debated these issues for years and the graduate students have voted that they want representation. Columbia has refused to accept that it lost the argument when graduate students overwhelmingly voted in favor of unionizing. Columbia--like so many of its peers--claims that a union would constitute a "third party between student and teacher." But it has not hesitated in seeking out external law firms to fight the unionization.

More importantly, the issue of unionization is not concerned with the relationship between teachers and graduate students as students. It is concerned with the relationship between university management and graduate student workers as employees. By implying that the issue is about relationships of teaching Columbia's management has misrepresented the situation--what the graduate students are demanding is the right to bargain over employment conditions not over their activities as students.

Since Columbia's intellectual and academic arguments are very weak it appears that ultimately this is about power. The Columbia administration's decision to hoard theirs in clear contradiction to both the NLRB and the expressed will of their graduate student workers. Like their fellows at the University of Chicago and Yale, to name only two, they are behaving much like feudal aristocrats have always done when faced with a challenge to their authority--by claiming that they are only concerned with maintaining personal relationships. But what that really means are paternalistic relationships in which subordination is key.

It is important to recognize that the threat to academic freedom and learning does not come from graduate student unions but from overweening managerial authority. I have taught in universities with unionized graduate students for nearly three decades and have not once had the union interfere with a genuinely pedagogical question. I have, however, seen unions support graduate student employees in preventing their employment by the university overwhelm their capacity to fulfill their jobs on the one hand and pursue their studies on the other. But as we can see more generally with the consistent decision by university managers to impose precarious working conditions on more and more of their labor force, management is not in fact thinking about either academic freedom or the relationship between teachers and students. Its concerns lie elsewhere.

Thursday, January 18, 2018

Thursday, January 18, 2018

Jerry Brown's terms as governor have been bad for CSU and UC funding. The doubling of tuition revenues has not actually made up for the state cuts followed by small annual increases. In the UC case, campuses also need to find another $700 million a year for pension costs they didn't have ten years ago, and additional money for buildings that the state doesn't build anymore. For the math behind our Lost Decade, see the last six paragraphs of "A Faculty Overview of the UC Budget--Tenth Anniversary Edition."

Last week, Brown gave CSU and UC even less than the inadequate 4% the systems thought they were getting, namely, 3%, which, subtracting one-time money comes to 2.1%, i.e. to the rate of consumer price inflation. The governor also does not propose a tuition increase. The two systems have 33 campuses between them, and Brown proposes that the structural problems and everyday squeezes at all 33 will remain in place.

Why does the governor and most of the Democratic establishment think UC and CSU can do more with less, and that state cuts don't hurt quality? Brown offered a kind of explanation (thanks to Cloudminder for the transcript).

It is enough. You'regetting three percent more and that's it. They're not gonna get anymore. And they've got to manage. I think they need a little more scrutiny over how they are spending things. It's just because the University is a good they say 'we've got to have more good' -but if you have too much good it -in certain circumstances - -it becomes a bad. So they're gonna have to live within their means. And what will happen here is when the next recession they'll have to put everything in reverse and lay people off and raise tuition and that's not a good thing. So, they've got to lower the cost structure and there are tools to do that and they need to step up and more creatively engage in the process of making education more affordable.

Brown posits as always that any quality problems are the result of bad UC and CSU management. This is a axiom for him that he never questions. He has always thought that the state's public universities spend too much money on administration and executive salaries (especially UC). He is again saying they should get all of their new teaching and research money by cutting there. This is a view he has held since around 1975. There is truth to the story of administrative bloat, but perversely much of it is caused by the cuts themselves, since they force campuses to staff up to pursue "alternative revenue streams." (I explain how this works in the The Great Mistake, Stage 2.)

Second, Brown categorically assumes that money can be saved by shifting much face-to-face instruction to online. Last year, he and California Community Colleges (CCC) chancellor Eloy Ortiz Oakley, whom Brown had also appointed to the UC Board of Regents, announced a fully online CCC degree program called the Flex Learning Option for Workers (FLOW). His budget proposes that this become a new 'online campus' for the community colleges. The idea is similar to what then-dean of Berkeley Law (and Yudof consigliere) Chris Edley suggested for UC almost ten years ago - an 11th campus that would be all online. The background assumption has remained the same: ed-tech has moved the cost-quality curve, so online college is "better faster cheaper" than face-to-face--both better and cheaper at the same time.

Brown has long been a true believer in online (see Toby Higbie, "The Governor's Thinking has Become Very Uptight"). But by the end of 2013, the MOOC-wave had crashed on revelations that it was neither better nor cheaper. The famous Brown-brokered deal between Udacity and San Jose State was suspended after an NSF-based study showed Udacity's online courses actually reduced remedial ed outcomes, prompting Udacity founder Sebastian Thrun to call it a lousy product. In addition, those of us who tried to find cost savings were unable to. Georgia Tech's online Masters-Udacity's other flagship--continues to run with multi-million dollar subsidies from AT&T. (See also the ambiguities of the University of Florida's online programs.) In short, online had not suspended the rules of learning, in which you can always save money . . . by cutting quality. After 2013, MOOC companies retreated from their initial claim to be replacing college, instead offering professional retraining and credentialing. (My retrenchment overview is here).

In focusing on adult re-trainers, Gov. Brown's current online proposal seems at first to follow the arc of retrenchment. But it comes with a renewed MOOC-style claim that online is "as good or better" than face-to-face. George Skelton quotes CCC chancellor Oakley making a categorical assertion of the online program's value because they are directed at "social network kids." A further example appears in Teresa Watanabe's coverage in the Los Angeles Times.

Laura Hope, a California Community Colleges executive vice chancellor,
said improved classes and tools for online orientation, counseling and
tutoring have significantly narrowed the performance gap between online
and traditional classes. Nearly two-thirds of online students completed
their courses in 2015-16, compared with just over half a decade earlier.
Over the same period, the percentage of students who completed
traditional classes stayed roughly the same, at about 71%.

There is no doubt that distance learning is more convenient than campus courses, or that online courses can and should play a role for at least some students. In Fall 2016, about 11% of CCC course units were taken in "distance education" (DE) format. The proportion of students taking at least one online course per year (for credit or noncredit) has gone from 19.5% in 2011-12 (page 4) to around 33% five years later (based on the CCC Chancellor's Office's Distance Education Fact Sheet).

Convenience granted, the real question is educational: is online as "as good or better" than face-to-face, as good or better in a way that justifies using them to replace face-to-face? CCC's own data analysis is now making this claim, summarized in this slide, which refers to "Success Rates" in all types of CCC courses for the past ten years.

In the email that accompanied this figure, a CCC official claimed it showed that online technology is on track to match the results of face-to-face. So, via CCC, "better" is back. And "cheaper" (though unproven) never went away.

As it happens, Cameron Sublett and I are in the middle of writing papers based on his extensive analysis of exactly this CCC data. Our topic is racial disparity in online courses. Our overall question is, does moving students of color from face-to-face to online help or hurt their education?

Cameron was able to reproduce the CCC figure with the data we've been been using all along. Following our past practice, he then disaggregated outcomes by type of course and by racial category. Here are two examples of face-to-face / online comparisons, using two types of course that are likely to resemble the "retraining" courses offered by the FLOW program.

Online continues to deliver a significant drop in success rates in basic skills courses. The convergence trend CCC claimed on aggregate is much weaker here. In addition, online makes the racial disparity of in-person courses somewhat worse. The success rates of "Underrepresented Minority Students," to use the standard classification, are poor. In addition, they are not improving much in "Basic Skills," as CCC claims for the aggregated results. [This last sentence was clarified after initial posting; h/t Teresa Watanabe.]

One reasonable policy conclusion would be quite the opposite of Brown's and Oakley's--Black and Latinx "basic skills" students should never be placed in online courses. White and Asian students should use them sparingly.

The second figure:

Success rates are generally higher in vocational courses. This is true with online as well, where the convergence with in-person is more convincing. Racial disparities remain, and remain larger than with in-person courses. Again, a system that is serving a minority-majority student population needs to be very careful with its use of these courses.

We'll have more to say about all this in further writing. We have technical issues with the CCC's definition of "success" that may turn out to lower all of these rates, but we won't know that for a while. We have issues with using completion as a proxy for learning. But for the moment let's leave it at this:

(1) Online is valuable and important as a selective and supplemental approach to extending in-person higher ed. It helps students who cannot stop full time work or family care. It is especially good at dealing with the repetition that is part of all learning. This is an area where it has a clear advantage over human teachers, as language labs (and books!) have been proving for generations.

(2) State leaders are wrong to continue to push online as a categorial good. This current push depends on aggregating data in a way that conceals how online disadvantages African American and Latinx students. Online education is currently an engine of racial inequality, and no good higher ed policy can be created by ignoring that fact.

(3) Online should never be used to excuse state budgets that are too small to support the established features of educational quality. These features include the presence of fully-qualified teachers working with classes that are small enough to allow individual feedback. Online that approaches face-to-face quality is actually a "hybrid" that relies on structured personal contact. We know of no hybrid online courses that will save universities money. States should never budget by assuming the opposite.

In short, university officials, including faculty senates, should loudly oppose officials who let online reinforce the color line. The FLOW program should restart the discussion about the higher ed practices and investments that would actually reduce racial disparities in attainment, rather than cover them up.

Tuesday, January 9, 2018

Tuesday, January 9, 2018

In December I took a break from blogging about universities to write a set of overdue papers. That was interrupted by December's Thomas Fire, which destroyed houses in Ventura County, including at least one UCSB faculty member's, and threatened at several points to burn down Montecito and Santa Barbara as well. Thomas wound up as the largest fire in California history, but not the most destructive or deadly. That last part was entirely because of the powers of the public service known as fire protection.

I was traveling when the fire headed off west from Ventura County and entered Santa Barbara County. I obsessively watched live KEYT news coverage and the daily 4 pm meetings, while at other times Facebook messaging the TV station when their burn map wasn't updating properly or they misidentified a canyon I recognized. My mother and youngest brother also live in the City of Santa Barbara; both were born and raised in Los Angeles; she has been through about 20 wildfires, and has been evacuated in both LA and SB at least 6 times. At one point on December 16th (the date of the photo above), I called her to say, "the new mandatory evacuation zone boundary is your street!" She said, "oh, that's the other side of the street." "Mom!" I replied. "Well," she said, "my side is voluntary. I'm fine." Later on a deputy who disagreed came knocking on her door, and she wound up flying north to stay with her sister for the next 10 days.

I couldn't keep myself from comparing fire fighting and higher education during the community meetings. Every day, at least a dozen people representing different agencies spoke in an high school auditorium to anyone who wanted to show up. This included officials from Cal Fire, which I understood to be the lead coordinator of the many agencies involved in the effort, as well as the county sheriff, the local highway patrol captain, the US forestry service, county health, county air quality, animal rescue, city and county schools, the county fire battalion chief, various spokespeople from one or more of the many fire agencies from outside the county, and someone just back from emergency work in Puerto Rico. Each afternoon they described the efforts of what became 8100 firefighters working out of at least 2 base camps, hundreds of engine units, dozens of helicopters, a Boeing and an Airbus bombing the inaccessible slopes with retardant, and the invisible logistics, communication and management personnel along with the folks staffing the evacuation center at UCSB.

The first days laid out the underlying conditions--seven years of drought was now coupled with record low humidity to make the hillsides ready to burn even when the wind dropped, which it did not do reliably. Every day's meeting updated the public on the evolving strategy, which in a sentence was to use bulldozed fire breaks and water drops and hand crews to push the fire towards the previous burns that Santa Barbara County has in abundance. New fuels don't burn as well as old fuels--battalion chiefs apparently don't see trees and brush, just variations of fuels. There were maps and plenty of repetition, especially from the police who wanted people to be patient with the blocked access and crowd control in the evacuated areas. The updates seemed to me to be relatively unvarnished. The tone at least was far removed from the PR messaging that has taken over public communications these days. It stayed rooted in a common problem that the fire agencies were trying to solve with the community. If the first round description of the day's strategy was a bit too technical, the details were unfolded in questions and answers that went on as long as the audience was willing to stay via direct access to the officials in the room.

These fire meetings were a model of public engagement that I wish universities would use. The problems we address have a more distant horizon, but that's the only difference.

There's another issue raised by fire protection. Markets and fees were not involved. What was not happening was the allocation of this public service according to ability to pay. Protection was available to everyone equally on the basis of general provision through taxation. This was true even though private property was at stake--our excuse for charging tuition--such that every homeowner experienced a private market gain (a non-loss) when her house didn't burn down.

You don't have to imagine how the critique of "free firefighting" would sound-- you hear it all the time with universities. "Fire protection does have some benefit to the national forest, but most of the benefit is to private property owners. Because public fire funding is expensive and lacks market discipline, we are cutting the funding and the basic service, so you are eligible for one free fire department call to your house every three years. If you need more fire service, we have many plans to fit every budget. Those with large private property benefits should buy Premier-level privatized firefighting--our 'Ivy League Plan' offers the fire protection equivalent of moving you from the bottom income quintile to the top one percent. For those who need more service but cannot afford it, the state has set up a Fire Aid Program to consider your application on a case by case basis, where you will submit your family financial and fire need information via our 12-page FASFA form (Free Application for Fire Supplemental Aid) . . ."

Any Tom, Dick, or Harry can allocate a public good through market mechanisms--the past four decades of public policy have shown this. The questions are why we would want to, and what we lose when we do. Education and fire protection are public goods and yet, contrary to a truism of economics, they are "rivalous" (the engine at my house is therefore not at your house), and "excludable" (full quality fire protection may cost more than your community can pay). Full quality firefighting depended on pulling dozens of crews from all over California and at least nine other states, on the strictly non-market basis of emergency service mutual aid.

Society has tended to treat higher ed as a private good because it can, because it saves wealthy, powerful people money, and also because it has not grasped the cost. The cost is clear in a fire: private fire protection would have

a vast bureaucracy for internalizing returns by matching payments and services, which would have undermined Cal Fire-type managerial efficiencies;

increased overall fire danger by overprotecting wealthy and under-protecting poorer home owners, whose losses would be not only a greater relative catastrophe but would also send embers onto richer roofs;

prevented the massive general public firefighting effort on which the private firefighting is entirely parasitic;

destroyed the wall-to-wall public support for an effort that was trying to help absolutely everybody at the same time.

The silver lining in the giant Thomas smoke cloud was the public good that isn't clotted with private interests. We want our towns not to burn down because of global warming. We want our kids to be smarter than we are, since that is our only hope. In such cases, we finally don't want to use price signals to allocate according to individual ability to pay rather than to get the broadest allocation of the best possible quality for maximized general benefit.

The glory of civilization is not the market signal but almost its opposite--the intelligence that emerges in general collaboration as people figure things out together for the immediate and the long term. The University of California, Cal State Channel Islands, Santa Barbara City College--not to mention Hollywood High Schoo--are all more like Cal Fire than they are like Genentech. We need a rebuilt public funding model that reflects that basic fact.

Today the helicopters are back, this time chasing floods. Many thanks to all the public personnel who saved (most of) our bacon last year--including the state prisoners on the fire's front lines. Welcome to 2018, and please keep your eyes wide open.

Monday, November 27, 2017

Monday, November 27, 2017

The UC Regents have finally released Justice Moreno's Report into the allegations that UCOP interfered with last year's audit. As Chris and I noted last spring (see here, here, here, and here) the damage caused by UCOP's handling of the audit has been considerable. With the release of the audit, newspapers up and down the state have intensified their criticisms of UCOP and President Napolitano. Although the Regents and others are trying to minimize the implications of the audit, the damage is real because the Moreno Report is so damning.

The State Auditor, Elaine Howle, had explicitly requested that the campuses send their survey responses directly to her office. The surveys covered campus views of UCOP itself, and were thus not to be routed through UCOP. As the report makes clear, President Napolitano approved a plan that required campuses to submit their evaluations of her office to her office before they were transmitted to the auditor. Although there may not have been any illegality in UCOP officials asking to review the audit responses, it was a remarkable step to take: requiring that evaluations of a superior pass through that superior would obviously have a chilling effect on the responses.

UCOP insists that their intention was simply to make sure that the responses were appropriate to the audit and represented the view of the campus chancellor. But this claim isn't persuasive. Justice Moreno and his team found numerous examples of the President's Chief of Staff and Deputy Chief of Staff pressing campuses to make their evaluations more positive (9-13). The chancellor of the Santa Cruz campus reported receiving an angry phone call from President Napolitano because his campus had sent their responses in without being checked by UCOP. After he recalled his responses and went over them in light of UCOP criticisms, UCOP again pressed him to make further changes (20). President Napolitano has declared that she didn't know that her Chief of Staff and Deputy Chief of Staff were intervening on the micro level. But she did approve a plan that, by its very nature, would stifle the free flow of knowledge and information upon which the audit (and indeed a healthy university) depends.

In order to explain its actions, UCOP claimed a "toxic" relationship between the University and the auditor and the sense that the audit itself was political. And the Moreno Report does raise important questions about the behavior of the auditor's staff in intruding upon and surveilling UCOP staff members (5-6). But while these facts may help explain the attitudes of UCOP, they do not justify their actions. Most of the discussion of the relationship between the Auditor and UCOP has focused on the 2016 audit of non-resident students which caused open conflict between UCOP and the auditor. But it is important to remember that the struggles go back at least as far as the 2011 audit that identified funding inequalities between campuses and pointed to a correlation between those inequalities and racial composition: the poorer campuses had the highest proportions of Latinx, African American, and Native American students. Grasping that longer history is essential if UC is going to move forward from the present crisis.

Viewed together, the three contentious audits reveal several ongoing problems in UC's governance and strategies. First, each of the audits marked the increasingly damaging effects of the implicit privatization strategies that UC adopted during the Schwarzenegger administration. The first audit, as Chris pointed out at the time, hid the damage of state disinvestment by wrongly counting student fees as public funding. Importantly, while the University challenged the audit's criticism of funding formula for campuses (80-81), it did not address this most fundamental change in the definition of public funding.

This acquiescence had two interconnected effects. First, it almost inevitably accelerated rises in tuition and reliance on non-resident tuition. Second, when the rebenching process later reduced campus inequities in state funding, it shifted inequality between campuses to their ability to generate non-resident tuition--an ability itself dependent, at least in part, on historical funding inequities. One didn't need a crystal ball to see that the handling of non-resident students would become a political flash-point, when neither UC nor the state were willing to think seriously about how to structure a university that could meet its intellectual and social obligations while maintaining traditional, lower proportions of non-resident students.

Internally to the University, the acceptance of privatization has led UC to flail around in search of a magic bullet. This process started during the Yudof Administration. On the one hand, we were treated to the spectacle of the Regents' UC Commission on the Future that produced no new ideas but exhausted people's time and energy. On the other, we witnessed President Yudof's support of Berkeley Law Dean Chris Edley's fantasies for online education combined with his contempt for inclusive decision-making processes. Shockingly, the eagerness to follow private sector fads (tech and managerial) didn't provide any real answers.

When President Yudof stepped down, the Regents continued their practice of following the latest managerial fetish and sought out a non-academic politician for president. In theory, President Napolitano should have been able to improve the political and fiscal standing of the university. After all, she had a successful political career and, while Governor of Arizona, had supported higher education in that state.

That expectation has proven inaccurate. In the aftermath of the latestaAudit, UC is in its weakest political position since the Dynes presidency in the 2000s--if not since the late 1960s in the aftermath of the firing of Clark Kerr.

But if UC is in a weak political position externally, equal damage has been done to the University internally. The effect of the Yudof and Napolitano years has been a growing centralization of power in the hands of UCOP, a tightened control over the campuses, and a marginalization of the Academic Senate as an independent voice. Instead of initiative from below, essential to any real university, we face an intensifying managerial structure of top-down efforts to reduce the faculty's authority over academic matters.

Even President Napolitano's recent National Center for Free Speech and Expression is a symptom of this centralized thinking. I hope to say something about its organization elsewhere, but for now I would simply point out that it was created, as far as I have been able to learn, without any Senate review. Even a single campus research center would receive that much oversight. Nor have more clearly administrative initiatives been thoroughly analyzed independently of optics and politics: the UCPath debacle, begun under President Yudof and continuing today, makes that clear. We seem to have gone from Fiat Lux to simple Presidential Fiat.

UC needs new leadership. But this cannot be limited to finding a replacement for President Napolitano. The UC Regents, after all, have made the decisions--through their choices of presidents and policies--that have brought us to this point. The Regents and UC must give up on trying to mimic the failed Michigan model in finance and the failed managerial model in administration. The new leadership of the university must restore the primacy of academic judgment over the demands of finance, must seek new ways to transfer funds from administration to education, and must be open to ideas from below. Meanwhile, the Senate must move beyond its currently reactivity and begin to act as a producer of vision and not just a commentator on administrative proposals. In addition, faculty throughout the system need to take ownership of their local budgets and campus futures.

UC needs new leadership but it is crucial that that new leadership be based on more inclusive decision making and a vision that places academic judgement and the University's academic future at the heart of its planning.

Tuesday, November 7, 2017

Tuesday, November 7, 2017

This blog turned ten on Sunday, prompting me to wonder whether blog years are longer than kid years, or the other way around. Kid years are longer when you're waiting for your birthday. Blog years are longer when you're watching a university board meeting and you could have sworn the president said exactly that same thing about the budget 7 years ago, except it was a different president. In any case, UC Berkeley looked like this when we started -- me in 2007, as a kind of alternate track while I was finishing a book called Unmaking the Public University, and Michael in 2009, when California higher ed got massively cut, employees were furloughed, students were protesting massive tuition hikes, and the road ahead seemed both steep and open. Of course time in higher education policy moves in a circle, rather than straight ahead, and those of us who assumed that our professional status obligated us to continuous institutional self-governance wondered whether we were actually crew blown "into the devious zig-zag world-circle of the Pequod's circumnavigating wake."

You do what you have to do, which for us has meant offering analysis of the full range of university topics, which themselves intersect with the full range of U.S. scientific, social, and cultural issues, increasingly managed in Ahabian style, with many similarly loyal first officers who, notwithstanding the last ten years of missed opportunities, remain less doomed than Ahab's. One dominant theme has been the persistence of culture wars on the university, now returned in the form of accusations that universities are the enemy of free speech. Another has been the way short-term public cuts have been translated into long-term structural adjustments. Both of these we stubbornly oppose, not just because we are stubborn, though we certainly are, but because we can see better alternate realities, which we will continue to set down here.

For a good while we were greatly helped by the editing of Jack Chen at UCLA, and are still helped by Alysse Rathburn working in the background, along with at least two dozen intermittent contributors, some anonymous. Many thanks to all of them, and to our readers. The work for universities continues, and I know I don't speak for Michael when I say here's to the next ten years!

Wednesday, November 1, 2017

Wednesday, November 1, 2017

How are we doing with the private-goods model? Advocates have defended it by saying that "multiple revenue streams"--tuition, philanthropy, non-resident enrollment growth, housing, for-profit masters programs--protect the university's public benefits.

I got an up-close look during my second visit this year to the University of Michigan at Ann Arbor. Preparing a lecture on the theme of "U-M: 2117," I went through the university's most recent public data, realizing I was doing this for the first time since our UC Academic Senate group wrote the "Futures Report" ten years ago, using Michigan as a worst-case state cuts scenario.

The good news is of course that U-M is one of the world's great universities, having pioneered inclusive quality and public funding in the 19th century, and gone on from there. It has wonderful people and programs, as I experienced once again first hand.

It's also a best-case example of privatization. It has an endowment of around $11 billion, making it 9th in the country and the largest public university endowment focused mainly on a single campus. It is said to have the largest living alumni base. It is second in the country in extramural grant revenues, and would be first if we excluded Johns Hopkins' Applied Physics Laboratory as a de facto government lab. It has an extraordinary number of departments ranked in their discipline's top 10 for research. It was an early entrant in professional education, and pioneered large research centers in the social sciences. It's a member of that tiny elite that doesn't lose money on its sports programs.

But there are costs.

First, students: In-state fees are $15,000 for lower division and $17,000 for upper division. Non-resident tuition is now over $50,000 for upper division students. Average student debt for borrowers is a comparatively low $26,000. But here's what the student body looks like.

Nearly two-thirds of U-M students come from families that make over $150,000 a year (top 12 percent). The students who come from the bottom half of the population by income--and who are the furthest behind the upper-middle class in college attainment--amount to 13% of the student body. U-M's Pell grant share is 15 percent, tied with the boutique private Rice University, and nearly the same as Northwestern, Tulane, and Duke. (UCSB's is 38 percent; UC Berkeley's is 31 percent, or twice Michigan's share.)

Another group whose college completion is an urgent public good are first-generation students.

Seriously, 5 percent? That's about one-third the rate of elite privates like Stanford and Princeton. U-M-Ann Arbor enrolls African-American students at around a third their share of the state's population. The data show that under the Michigan Model, the public research university simply stops being relevant to the majority of the population the system was invented to help.

In 2016, the national press discovered the feasibility of free college. In 2017, they've discovered a consequence of its absence: tuition strategies increase inequality. Some of this year's reporting is based on research from the Raj Chetty crew: a parial list of papers is here; a series of New York Times reports this year can be sampled here and here. There was renewed coverage last week from Lee Gardner at the Chronicle of Higher Education and Rick Seltzer at Inside Higher Ed, both on the theme of public universities now catering to wealthy students. The University of Michigan is Exhibit A.

What about the business end? The main private revenues are various kinds of tuition. Leaving aside their negative social effects, they are probably close to their maximum. Enrollment growth--especially non-resident enrollment growth--also has costs and limits. There may be a bit more mileage left in both, but these are mature strategies.

There's philanthropy. U-M Ann Arbor is a best-case situation.

Operating revenues from endowment are a small fraction of the U-M system's nearly $7 billion overall revenues.

Tech transfer revenues also come up in this context: UCLA recently added a business board to its operation because the professional campus staff was supposedly missing some big money. The U-M case says there isn't any.

These are gross revenues, so the return to research is much smaller. And the gross, averaged up to $25 million a year, is under 2 percent of research expenditures, never mind the overall campus budget. We need more STEM research, not less. But we can't justify it in financial terms.

The big research gross tells an important story.

Ten years ago, U-M was spending 15 cents of its own money to support each dollar of research expenditure. Now they're spending more than twice that. In 2016, they spent $456 million of their own funds on research. Inadequate cost coverage turns research universities into subsidy platforms for outside sponsors, and U-M has stayed on top by paying out of pocket (federal revenues are flat). The further universities move from public to private sponsors, the more their institutional subsidies rise. This is an absurdly taboo subject, while in the background subsidies continues to erode public university solvency.

Top university officials often say privatization, under its quasi-official name "multiple revenue streams," works just fine. The evidence says the opposite: it damages public benefits (quality degrees across the whole society), and university finances at the same time.

Friday, October 27, 2017

Friday, October 27, 2017

The news is that UCOP has legitimated the conventional wisdom that there's a crisis of free speech on campus by funding a center to study it. But I'm still thinking about the situation at other campuses, from Drexel's suspension of a tweeting professor that I discussed at length in Inside Higher Ed last week ("Feeding a Dangerous Fiction"), to one of the many interesting exchanges I recently had in Reno. During questions after my lecture at the University of Nevada campus there, a man in his mid-40s told a story about his friend, a cement tycoon, who didn't get a thank you note from his East coast alma mater for building them a football stadium. He then asked me when I thought universities were going to get back to "merit and accomplishment" and stop spending their time catering to their "special snowflakes." I smiled at him. He was a UNR alumnus but not an academic, and I love talking with non-university people about universities.I said that there is no tension between rewarding academic merit and "protecting snowflakes," which I translated as creating non-punitive and non-threatening conditions so that people's brains can operate correctly. The latter is the means for achieving the former. People learn only when they feel relatively safe and respected--not protected from their own wrongness, stupidity, and failure, but protected from stigmas, stereotyping, and mistreatment based on who they are and where they are coming from. We can look at the vast learning literature for evidence of this truth. Or, I said, we can can refer to your story. Your donor friend felt hurt for not being thanked properly for his gift, and thus is having his "performance" in relation to his alma mater reduced. Similarly, the classroom performance of Black lesbian feminists is impaired by disrespect for them, implied or intended. I'm a default egalitarian, I continued, which means supporting everyone's performance equally, while also knowing that means different things depending on whether one is a rich white donor feeling unappreciated or a young Black college student hearing nonsense talked about themselves. I may have said "even if we own a cement business we're all basically snowflakes"-- I can't remember. In any case he smiled, waved, and departed. I was left to ponder where he got the idea that even UNR, with its endless pouring of cement (pictured above), is mainly in the snowflakes business.The most direct answer is that a bipartisan crew of campus free speech advocates continues to mis-frame the stakes of the debate. Key members of the liberal center have joined the political right in committing this important error. The error is to cast universities as safe harbors for enemies of free speech in particular and of freedom in general--with administrators as their squishy enablers.Every week, the situation gets a little more propagandized. On the right, the motive for affirming this fake story is obvious. Republicans have to control all three branches of the federal government and most state legislatures and governorships with only 1/3rd of the national electorate. They have a sole economic strategy, which is a combination of deregulation and tax cuts that over the decades has directly hurt their middle class base without actually helping the economy. To maintain minority rule on the basis of failed economic policy, they need to trot out enemies, and the university has been a stock culture-wars enemy for well over 50 years. In addition, now that "The Party of Lincoln Is the Party of Trump," Republicans need to sustain Trump's leadership moves--retaliation and abuse--while neutralizing their downside, which is retaliation and abuse, or, in other words, tyrant modalities in the service of what political scientist Jeffrey A. Winters describes as the country's "civil oligarchy." They also need to keep people from noticing that their business agenda depends on secrecy and confusion, which free speech standards would undermine were they applied to commerce. For example, VP Mike Pence broke a tie on a Senate vote that forces victims of bank fraud back into private arbitration, where victims are not even allowed to talk about the problem for which they are seeking redress. The Right protects commercial speech from disclosure while advocating it for public spaces, where the First Amendment does apply, and also for college campuses, whether or not it interferes with academic freedom. In sponsoring speech that insults and upsets people, usually members of social minorities without power to retaliate, they can hope to trigger a backlash in which, Milo-style, they can play the victim. When they do defend free speech for leftist professors, as the National Review did in the George Ciccariello-Maher case I also wrote about, they use it to describe college campuses as clubs for protected idiots.The Right's demand for democratic speech is highly selective, not applying to Equifax or Renaissance Technologies but always applying to the student and professor part of the university sector. These two groups stay in the political doghouse where they can be theatrically punished. This venerable practice generally receives an unfortunate assist from the political center, which helps frame universities as anti-liberty. As I noted in the IHEpiece, some prominent liberals have aligned themselves with the Right's stereotypes of the freedom-hating campus Left.

Yale law professor and novelist Stephen L. Carter, writing in Bloomberg,
said that Middlebury-style “down shouters will go on behaving
deplorably and reminding the rest of us that the true harbinger of an
authoritarian future lives not in the White House but in the groves of
academe.” Fareed Zakaria asserted on his CNN program in May, “American
universities these days seem committed to every kind of diversity,
except intellectual diversity. Conservative voices and views, already a
besieged minority, are being silenced entirely … There is also an
anti-intellectualism on the left, an attitude of self-righteousness that
says we are so pure, we’re so morally superior, we cannot bear to hear
an idea with which we disagree.” Historian Jill Lepore used her space in The New Yorker to argue,
via a cherry-picked series of scattered examples, that today’s
controversies are driven by a “tragedy of betrayals” in which, from the
1970s on, “the left’s commitment to free speech began to unravel.”

My new friend in Reno would have every reason to think snowflakes were demanding that all campuses silence speech, since he could find that view in the New Yorker as on Bloomberg as readily as on Breitbart. My pal could also get it from the leading First Amendment scholar and Berkeley Law Dean Erwin Chemerinsky, who frames his arguments with the same stereotype that "current college students are often ambivalent, or even hostile, to the idea of free speech on campus." When he appeared on KQED's Forum program last August, Chemerinsky did not engage caller questions about whether universities must host advocates of positions that science and scholarship has already refuted, which were questions about academic standards and academic freedom, but chose to hear them as doubting the First Amendment.Actual Left positions on free speech are represented by Joan Scott (interview with Bill Moyers rejecting viewpoint-discrimination on campus), Hank Reichman (bridging free speech and academic freedom via a post-Marcusian critique of tolerance), Wendy Brown (rejecting free corporate speech as the model for campus speech), Leigh Raiford (tying free speech movements to civil rights), Keeanga-Yamahtta Taylor (describing speech protests as widening civil rights tactics and goals), Tiya Miles (on speech needing to be embodied in "corporeal protest") and Robert Post (universities' obligations to educational goals are logically prior to their First Amendment duties). (Post's longer paper is here.) None of these positions advocate a priori viewpoint discrimination, though that is the typical charge.Post's argument is that the First Amendment protects political speech but not all speech in any context. an obvious exception is private business: mall security can prevent anti-abortion rallies at the shopping center food court without losing a First Amendment lawsuit. Post notes that free speech requirements also don't govern the exercise of professional competence. "We do not apply to doctors sued for malpractice the core First Amendment
doctrine that 'there is no such thing as false idea.' We hold doctors
accountable for their expertise." He goes on to apply this professionalist framework to universities:

Another “bedrock principle” of the First Amendment is that “the
government may not prohibit the expression of an idea simply because
society finds the idea itself offensive or disagreeable.”
Yet no competent teacher would permit a class to descend into
name-calling and insults. Even if the object of classroom education is
to expose students to ideas that they might find disturbing or
threatening, it is nevertheless inconsistent with learning for students
to experience this encounter in settings where they are personally
abused or degraded.

Regarding outside speakers, Post writes,

universities are not Hyde Parks. Unless they are wasting their resources
on frolics and detours, they can support student-invited speakers only because it serves university purposes to do so. And these purposes must involve the purpose of education.

There's much to be said about this view pro and con, but the core idea is correct: in principle, academic authority rests on tested, disputable, and accountable expertise, not on the exercise of superior political power as covered (and prohibited) by the First Amendment.The Left has long done a superb job of describing all the ways that formal viewpoint neutrality is actually discriminatory. It has mapped the many ways that this discrimination works generally against whomever has less power. This has involved talking about inequalities of power and resources, which are topics that the Right does not enjoy, and that its partisans conceal in part with the trumped-up free speech controversy.In addition to continuing to press on denied, veiled, and structural discriminations, I'd like to see the Left develop a model of free speech also grounded in both professional duty (the doctor example above) and educational purposes. Both are based in things the Right has successfully weakened over decades--appreciation for expertise, and a working model of public goods. Racial equity, gender justice, and similar forms of equality and reciprocity are good both because they help the public good of learning and because they are common goods, if not rights, ethically and philosophically valuable for their own sake. In other words, free speech needs to be reconnected to the social justice issues that trigger the Right-- and too much of the center.